Discussion:Clarification on Section 197

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 +{{ForumReplyPost|UserID=RJM|Date=11 March 2008|Text=Mike, my limited understanding is that a 338 deemed asset acquisition does permit you to amortize the S197's. However, the 338 election is a taxable event. Anyone with experience in this want to comment? I am interested in the details as well.}}

Revision as of 21:55, 11 March 2008

Discussion Forum Index --> Basic Tax Questions --> Clarification on Section 197
Discussion Forum Index --> Tax Questions --> Clarification on Section 197

MikeDongo (talk|edits) said:

11 March 2008
Just want to make sure I got this right


ParentCo acquires 100% of TargetCo stock for 20 mil. FMW of assets is 7 mil. 13 mil is attributable to goodwill.

Is the following correct?

Goodwill CANNOT be amortized under Sec. 197 because Reg. 1.197-2

"The term section 197 intangible does not include property described in section 197(e). The following rules and definitions provide guidance concerning property to which the exceptions apply:

(1) Interests in a corporation, partnership, trust, or estate. Section 197 intangibles do not include an interest in a corporation, partnership, trust, or estate. Thus, for example, amortization under section 197 is not available for the cost of acquiring stock, partnership interests, or interests in a trust or estate, whether or not the interests are regularly traded on an established market. (See paragraph (g)(3) of this section for special rules applicable to property of a partnership when a section 754 election is in effect for the partnership.) "


HOWEVER, if ParentCo and TargetCo elect a Sec. 338 election, then the goodwill can be amortized over 15 years

Is that correct?

RJM (talk|edits) said:

11 March 2008
Mike, my limited understanding is that a 338 deemed asset acquisition does permit you to amortize the S197's. However, the 338 election is a taxable event. Anyone with experience in this want to comment? I am interested in the details as well.
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